Make This Your Best Financial Year Yet

Want to make this the year you really get behind your financial goals? Practicing the 12 behaviors listed below can help you build financial stability. Don’t wait to implement these suggestions. Start using them today, and day-by-day, to exercise and strengthen your financial muscle.

Picture your financial fitness. Visualize your life when you are financially fit. What will life look like, sound like and feel like when you have more money in the bank and fewer bills dragging you down? What will you see happening around you? What will you hear people saying? What will your own self talk sound like? How will you feel inside? Take time now to capture that feeling in your body and memorize it. Later, when you are tempted to spend beyond your means, pull that picture to mind and recall how good you will feel if you don’t spend extra money and let yourself enjoy the security of money in the bank instead. Get in the habit of spending money only to reduce debt instead of increasing it.

Commit to learning all you can about financial fitness. Start by reading at least one book on finance and debt management. Check out Dave Ramsey’s Total Money Makeover and Zero Debt by Lynnette Khalfani-Cox. You also may like Debt-Proof Living: The Complete Guide to Living Financially Free by Mary Hunt and The Richest Man in Babylon by George Clason, which uses parables to share information about discipline and self-control. Save money on books by checking them out of the library or purchasing the Kindle edition.

Make a budget and stick to it. Make a list of your bills on paper, a ledger sheet or a computer spreadsheet. Review it and decide which purchases and monthly bills are absolutely necessary and required. Then practice eliminating at least one expense per month from recurring bills. Think about what you can do without or do for yourself instead of hiring someone to do it for you. For example, can you eliminate your Starbucks run by carrying coffee from home? How much will you save if you color your own hair or cut your own lawn? How much might you save if you buy fresh foods instead of prepared foods? And stop eating out at restaurants if you have debt you can’t manage now. Eating at home is easier on your budget. As you change these behaviors, you’ll be working your financial decision muscles and saving money too!

Focus on saving for the long term. If you have a retirement plan, increasing the payroll deductions you allocate to a savings effort by even one percent will help you save for the future. Get in the habit of increasing your contribution to matched plans annually by one percent until you have met the maximum contribution allowed. If you don’t have a retirement plan, speak to a banker, accountant or financial planner about how you can set up a self-managed plan, such as an IRA or Roth fund. Or simply open a savings account at your local bank and deposit a small amount from each paycheck.

Stop borrowing. Resolve not to take on more debt this year. Avoid the temptation to respond to credit offers you think will help you stretch your paycheck. Use the money you don’t spend on credit to pay down existing debt or save for a rainy day.

If you’re drowning in debt, learn how to negotiate and settle outstanding debts. Don’t rely on so-called debt consolidation companies. Most are scams. Companies (even those claiming to be non-profits) that offer debt management services add their own costs to your debt and only help you stretch payments out. You will pay more in the long run, which is not a good strategy for getting out of debt. A well-reviewed book on this topic is Negotiate and Settle Your Debts by Mandy Akridge.

Pay early, whenever possible, and always on time. This will help you get ahead of your bills, which may reduce stress. Did you know that stress hormones interfere with clear judgment? When you develop more financial fitness and feel better about your financial position, your confidence in your financial behavior will grow and may reinforce itself. Paying early or on time will also help improve your credit rating, which will be important to you if you need to renegotiate a mortgage or make a big purchase when you can afford it.

Watch less television! Television ads (especially the late night and home shopping variety) manipulate people into wanting and buying things they don’t need. Don’t be conned into buying on a whim.

Use only cash or debit cards (not credit cards) to make purchases, and don’t buy unnecessary items.

Live within your means. Plan to spend 10 percent less than you earn (and do it). Then put the 10 percent you don’t spend into savings.

Monitor your credit rating. Don’t purchase credit reports your don’t need. You can get a free credit report each year from each of the three credit reporting agencies (Experian, Equifax, TransUnion). Don’t get the reports from each agency all at once. Ask for a report from one of the three at three-to-four month intervals and you will be able to monitor your credit all year long, without incurring additional expenses. If you notice errors, contact the agency/agencies involved to correct any mistakes.

Stay balanced. Just as physical exercise helps with physical gait, the exercise of balancing your checkbook regularly will help keep your finances steady. Don’t rely on the bank balance you see online because that does not show you checks still outstanding. If you don’t keep a printed ledger, you could mislead yourself about how much money you actually have in the bank. Stay alert and aware of your ability to pay. And you’ll protect your credit score at the same time.

At Daley Law, we’re interested in how these strategies work for you. Drop us a line and let us know. Or call our office to schedule a consultation if you are so overwhelmed by debt that you believe you need assistance. Don’t wait and get deeper in debt while wondering what to do. We’re here to help.